Thursday, May 31, 2007

The IRS issued a warning this morning regarding a new email scam claiming to be from the IRS’s Criminal Investigation division. The goal of the email to convince the receiver that they are being investigated by the IRS for filing a false tax return. It attempts to get users to click a link or open an attachment that can take over the person’s computer hard drive and allow some one remote access to the computer. The IRS is warning American taxpayers not to click the link or open the attachment in the email. "Everyone should beware of these scam artists," claims Kevin M Brown, Acting IRS Commissioner. "Always exercise caution when you receive unsolicited emails or emails from senders you don’t know." The IRS does not send out unsolicited emails or ever ask for personal information via email. If you receive one of these emails forward it immediately to phishing@irs.gov.

According to Global Surf News June 21 has been dubbed International Surfing Day across the glob. This will celebrate the third occurrence of the holiday, which inspires surfers every where to take a day to share and acknowledge their love of surfing and beaches. "This is a great opportunity for us surfers to celebrate our sport by simply doing what we love to do most – going surfing," says Evan Slater, Editor of Surfing Magazine. "It’s also a great opportunity to remind everyone about the need and importance to protect our oceans, waves and beaches."

Wednesday, May 30, 2007

Placer County, California is now allowing people to search for and view tax bills for properties using a property's APN number. This will allow for home buyers to verify the tax bill for a property before writing an offer.

"It is clear that transparency and openness are pillars in encouraging our nation's charities to be responsive to the needs of the community," wrote the Senators. A more thorough form "will allow the IRS to better identify those entities that warrant additional review or further questions... and also mean that charities that are doing the right thing will be less subject to audit."

Among the topics the senators asked the Treasury Department to focus on as they revise the form:

Executive pay and perquisites - including payments from other charities, joint ventures, contracts, and subsidiaries

Endowments - charities that have endowments should show how much of the endowment is spent on their charitable mission

Related organizations and joint ventures

Fund raising - how much of the money they raise is spent on charitable programs rather than fund-raising costs

Hospitals - more information about their charity care and billing and debt-collection practices

Governance

"Fast and loose games in this area undermines the mission of nonprofits and fosters a public cynicism that's detrimental to all charities as they rely on public support for their nonprofit work," wrote the Senators.

After the Giants went ahead 4-3 in the top of the 12th, Benitez walked Reyes to lead the bottom half. Reyes moved up on a balk and then went to third on a sacrifice. Reyes stayed at third when Carlos Beltran grounded out but then was waved home when Benitez was called for his second balk. Benitez then gave up Delgado's winning home run.

The Hill reports this morning that conservative Republicans in the House have plans to derail the Senate immigration compromise based on a procedural matter. The bill includes tax policy, which according to the Constitution, has to originate in the House, and some Republicans have lined up to issue a "blue slip" stop to the legislation on that basis.

House conservatives are ready to stop the Senate immigration bill in its tracks with a procedural weapon should the contentious measure win passage in the upper chamber. The procedural weapon House conservatives may hold is a constitutional rule that revenue-related bills must originate in the House. The current Senate immigration measure requires that illegal immigrants pay back taxes before becoming citizens. This requirement opens the door to a House protest, dubbed a “blue slip”. The "blue slip" comes from the color of its paper.

House Republicans used the same back-taxes mandate for a blue-slip threat that derailed last year’s immigration conference. The new Senate bill still must survive two more weeks of voter scrutiny and contentious amendments, but several conservatives already are lying in wait for the Senate to “make the same mistake twice,” as one House GOP aide put it.

“If we get an opportunity to do it, believe me, we’ll do it,” the aide said. “I think it’s going to be a matter of who will get there first. A number of people in the House are dying to be fingered as the person who killed [the Senate bill].”

During a blogger conference call with Senator John McCain, one of the bill's architects, the conservative blogger, Captain Ed of Captain's Quarters, mentioned a Boston Globe story that reported the removal of a requirement to pay back taxes before entering either the Z-visa or Y-visa program. The White House reportedly requested that section be removed, and the blogger asked the Senator why illegal immigrants would get a pass on paying back taxes when American citizens don't get that privilege.

Senator McCain hadn't heard about the removal of the requirement. “I’d not heard that proposal on the part of the president,” McCain said, according to a transcript of the call. “I would resist that.” In fact, Senator McCain went back and reinstated the provision after the blogger conference call.

Inadvertently, Senator McCain may have provided an "out" for House Republicans to at least delay the bill's consideration. While any Representative can blue-slip a revenue-producing bill from the Senate, it takes a majority to enforce it. Given the heat from both sides of this debate, that may not be difficult to arrange, and it would require the Senate negotiators to start from Square One.

“We would certainly have the right [to a blue slip] and could exercise it,” another House GOP aide said.

Thursday, May 24, 2007

House Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA) issued the following opening statement during today’s hearing on the Internal Revenue Service’s use of private debt collectors:

Today, the Committee is repeating history. We again are reviewing whether the Treasury Department should be allowed to contract with private debt collectors for federal taxes.

This is not a new question for the Ways and Means Committee. I would like to read from an 1874 Report of the Committee repealing Treasury’s authority to use private tax collectors and pay them a commission. It states:

The Committee are of opinion that any system of farming the collection of any portion of the revenue of the Government is fundamentally wrong . . . No necessity for such laws exist . . . the Secretary of the Treasury and the head of the Internal Revenue Bureau are empowered by law to make all collections of taxes . . . The Internal Revenue Bureau is possessed of full knowledge of the laws relating to the collection of the revenue . . . [and] has all the machinery necessary for their full and complete enforcement . . . The Committee, in view of the facts . . . believe that the law . . . should be repealed and the contracts made thereunder should be revoked and annulled.H.R. Rep. No. 559, 43d Cong., 1st Sess. 9 (1874).

These words are true today–130 years later.

The collection of federal income taxes is a core government function. It is the mission and purpose of the Internal Revenue Service.

Today’s private collector program can never work. Taxpayers and the American public deserve better.

The IRS has 45 employees watching 90 contract employees yet no one has the full story on what they are doing. Debt collectors receive up to a 25% bounty on federal income taxes.

The IRS depends on the collectors to “self-report” complaints of taxpayers.

GAO investigators have confirmed that contractors have been exercising discretion over who gets offered to take the customer satisfaction survey.

The program targets low- and middle-income taxpayers rather than those who have the means to protect themselves.

At the end of the day, most Americans don’t even know that the harassing calls they receive are from debt collectors hired by the IRS.

To date, the collectors have made nearly one million calls in attempts to reach 35,000 taxpayers. Those called have been subject to harassment, confusion, and violations of taxpayer protections.

Mr. Chairman, I ask that a partial list of taxpayer complaints be included in the record. Mr. Chairman, I also would like to play five calls between an IRS private collector and one taxpayer. I want my colleagues to hear what our constituents are facing as the private collectors attempt to find the correct person owing taxes. I ask that a transcript of these calls be included in the record and that we play them for the Members to hear.

The “cat and mouse” game you are about to hear has captured over 300,000 members of the public. All but 10,000 of these were innocent parties who did not owe any tax. Social security numbers along with tax information must be protected to prevent identity theft and ensure the integrity of our tax system.

Wednesday, May 23, 2007

Earlier today Nina E. Olson, National Taxpayer Advocate, announced that the Internal Revenue Service will be awarding nearly $8 million in matching grants to Low Income Taxpayer Clinics (LITCs) this year. The IRS will be awarding LITC grants to 154 organizations from 49 states plus the District of Columbia, Puerto Rico and Guam. According to the IRS LITCs are "qualifying organizations that provide representation for free or a nominal fee to low-income taxpayers involved in tax disputes with the IRS or that provide education on taxpayer rights and responsibilities to taxpayers for whom English is a second language or who have limited English proficiency." Source: IRS.gov.

According to Pacific Business News, hotel occupancy has fallen below the two-thirds mark throughout the Hawaiian Islands. During a seven day period spanning May 5th through May 12th, Statewide hotel occupancy slid down to only 58.8%. This represents a staggering 16.9% dip from the same week last year. The last time the occupancy rates fell below 59% was back in December of 2004. Hotel occupancy in Hawaii was actually lower than the national rate of 64.8%.

On Sunday the Giant’s beat the Oakland A’s in a 4-1 win, thanks to pitcher Matt Morris. The Giants' veteran pitched a two-hit complete game with nine strikeouts to give the Giants a much-needed win after consecutive losses. ''This was something we needed today and I'm glad I was able to do it,'' claimed Morris. ''I'm not here to be on the back page (of the tabloids), that's for sure. I'm here to get my innings and keep the team in the game.'' For a more detailed recap of the game, check out All Headline News.

According to the Cincinnati Enquirer, General Motors Corporation set a new world record last week when their Sequel SUV fuel-cell vehicles were each driven 300 miles on public road using only one tank of hydrogen. The point of the drive was to prove that the vehicle was ready for the public, and that it could travel long distances without problems. "This is a very significant event to us," notes Larry Burns, Vice President of Research, Development and Planning. "Our goal was to go 300 miles because that is what our customers tell us they need. This is a vehicle that can carry four or five passengers, but this is also a vehicle that emits just water. We are in the infancy of a whole new automobile." The test came just one day after President George W. Bush announced his plans to increase vehicle fuel-economy standards by the end of 2008.

Specifically, the problem was that the IRS requires a complete financial disclosure from all taxpayers who owe in excess of $25,000.00. The complete financial disclosure includes giving the IRS extremely personal information and private financial information. The disclosure is required even if you arrange to fully pay the amount owed within five (5) years, which is agreeing to a substantial payment. The disclosure also requires substantiation of all financial information claimed. This includes providing copies of all current financial records, such as bank statements, paycheck stubs, proof of payment for monthly expenses (i.e. medical expenses, child care, etc.). As you can imagine, such a system acts as a barrier for many taxpayers to get a fair resolution. In fact, it frightens many from even attempting to address their IRS tax debt.

Congress, the U.S. Treasury, and the IRS can work together to create a more efficient and effective program. Simply raising the bar to when the IRS requires a complete financial disclosure will go a long ways towards creating that program.

Thursday, May 17, 2007

The Internal Revenue Service (IRS) is backing the U.S. Treasury Department’s efforts to include a proposal in the 2008 budget requiring many Internet businesses to collect personal data from their users. The proposal is part of an effort to close the ever-present gap between what Americans should pay in income taxes and what they actually do. This amounts to an estimated $300 billion per year. However, collecting the targeted data is going to be a difficult task for the site-operators and small business owners. Furthermore, the process will create security issues for millions of users in a time when online identity theft is rampant.

In 2001, the "tax gap" – difference between what the IRS should collect in taxes and what it actually does collect – was over $345 billion. Underreporting on individual income tax returns accounted for $197 billion of the gap. Underreporting on business tax returns accounted for $88 billion. This left the IRS collecting only about 85% of owed taxes. Since taking over the White House, the Bush Administration has seen this gap as an opportunity to increase the federal government’s revenue without raising taxes.

At the behest of the Bush Administration, the IRS has implemented a variety of new enforcement and collections measures to reduce the gap over the last five years. The efforts have paid-off: the IRS increased its enforcement revenues by nearly 44 percent from $33.8 billion in 2001 to $43.1 billion in 2004 to $48.7 billion in 2006. "Clearly, more work needs to be done by the IRS to improve service and enforcement," states IRS Commissioner Mark W. Everson. "But we are clearly making progress, and these numbers underscore that point."

Now, more enforcement and collection measures are on the table. As part of its ongoing campaign to close the tax gap, the Bush administration has allocated over $400 million of next year’s budget for these new measures. A main goal of the proposed measures is to increase the taxes paid by many sole-proprietors and small businesses. Currently, sole proprietors and small businesses report most of their income to the IRS through an "honor" system. The IRS claims some of these small businesses report only half of their total income, leaving millions of dollars in unpaid taxes. One specific target of the proposal is to collect taxes from income generated through online auction sites such as eBay and Ubid.com. Recent studies show over 700,000 Americans making their sole income from auction sites like eBay, and without any formal method to monitor these sales the government is assuming most of this income is being underreported.

Specifically, the new proposal would force auction sites acting as online brokers to file income statements for all customers using their sites to conduct 100 or more transactions or generating more than $5,000.00 per year in income. In order to comply, the sites would need to collect personal data from their users including name, address, and taxpayer identification or social security numbers (SSNs). Essentially, the IRS is forcing the collection of the data under the threat of liability and further legal consequence.

Typically, people generating income form auction sites are small businesses and self-employed individuals who do not have taxpayer identification numbers. Therefore, they will have to provide the sites with their SSNs, which will be stored and maintained by the individual sites in massive data banks of personal information. Although the IRS claims the sites will only need to collect data from high volume users, it is very likely that the sites will have to collect data from all of their users.

Having the proposed amount of personal data exchanged over the Internet could prove to be very problematic. Illegal phishing scams already target sites collecting personal data. Phishing is already problematic for eBay, where scammers create fake re-direct sites that retrieve users' personal data.

With so many issues of identity theft online, many people are going to be reluctant to provide their SSNs to sites like eBay. According to the Center for Democracy and Technology, "forcing businesses to collect SSNs could have a chilling effect on legitimate e-commerce if consumers balk at providing their SSNs for simple transactions -- something most people are not accustomed to doing."

In addition, the government is putting the entire financial burden on the Internet businesses. Collecting and safely maintaining this confidential data could cost millions of dollars. These large costs might not be a problem for huge companies like eBay, but it might be too much to bear for small businesses. More than likely, they will have to take on an additional and sizeable expense to store and secure the data.

Scott Weber, owner of GunrunnerAuctions.com, a site that auctions about 400 guns per month, said the additional paperwork would be a huge burden and additional cost. "I'm pretty much a one-horse operation here," Weber said. "I do everything myself. I would have to hire a whole bunch of people. I would have to hire someone full-time to do this. You'd need to track people all over the country, and you'd have to get their SSNs."

Some sites are already beginning to make changes with anticipation of this new proposal. Just a few days after the IRS’s announcement, Yahoo! Auctions announced they would close their auction sites in the United States and Canada effective June 16, 2007. Though Yahoo! Auctions only account for under 1% of total online auctions and they recently established an alliance with eBay, many are still wondering if Yahoo’s decision had anything to do with the IRS’s recent announcement.

Currently no lawmaker has come out for or against the new proposal. However, it is likely to go unnoticed as part of the President’s 2008 budget plans. As part of a representative democracy, it is the job of the citizen to notify their member of Congress when they disagree with an important issue. If you want your voice heard, you can write your representative through House.gov.

For more information on this topic, please see the following suggested readings:

According to Tax Foundation, the taxes on tobacco have shown the fastest increase in taxes on any product since 2000. Recent Census data shows that between 2000 and 2005 the taxes on tobacco products have risen a staggering fifty five percent, as opposed to much smaller increases on other products such as alcoholic beverages, gasoline, etc. This is consistent with the recent trend of raising revenue through means that are "politically feasible." Raising taxes on tobacco is politically easy because the tax revenue benefits all taxpayers but only a minority of people must pay the tax.

The 2007 tax season set new records for the number of e-files, direct deposits, and hits to the IRS’s official website. According to recent IRS data, there were over 76 million income tax returns that were e-filed, with an additional surge of last minute filers choosing to e-file. "E-file and our other electronic services helped us deliver a strong filing season for the nation’s taxpayers," said IRS Acting Commissioner Kevin M. Brown. "Again this year, millions of additional taxpayers gave up paper tax returns to file electronically. E-file and IRS.gov were among several factors that helped us overcome one of the most challenging filing seasons ever for the IRS." The IRS claims their official site received over 140 million visitors, up nearly 13 million from last year. Source: IRS.gov.

Tuesday, May 15, 2007

According to the Washington Post, the IRS has bad news for homeowners who are seriously delinquent on their mortgages and hoping for debt relief. If your lender decides to modify your loan or forgive your debt, you could end up owing federal income taxes on that amount. The IRS essentially treats the amount that is forgiven as ordinary income. Lenders are even required by law to notify the IRS when they forgive the debt. This news is especially bad in the current market, where many people are finding themselves upside-down in the current market because of interest only loans or property value decreases.

The IRS recently announced that purchasers of qualified Nissan and GM vehicles may continue to claim the Alternative Motor Vehicle Credit. The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold. Nissan only sold 2,094 qualifying vehicles to retail dealers, while GM sold 2,927 qualifying vehicles to retail dealers in the quarter ending March 31, 2007.

According to the Treasury Department the government collected a total of $1.505 trillion so far in 2007. This represents an increase of 11.2% over the same period last year. Included is $383.6 billion that was collected in April, the largest single month tax collection ever. In the beginning of the year government spending was at an all time high, but the total spending of $1.585 billion was only up 3.2% from last year. The Congressional Budget Office said it expects the total deficit for 2007 to total between $150 and $200 billion. This would be a significant decrease from last year's deficit of $248.2 billion.Source: CBS News

According to the Wall Street Journal, more franchise businesses are adding a new element to franchise owners, a designated charitable cause. The tactic known as cause marketing is a process where businesses link themselves to a special charity or social causes and raise funds through promotions and sales. The tactic isn’t new to big corporations like Nike, Home Depot, etc, but it’s beginning to gain popularity in franchise businesses. Having a designated charitable cause allows companies to unite franchisees in various markets, convey a consistent image, and boost their profiles and bottom lines. "It's increasingly popular among franchise organizations who are trying to penetrate local markets, who are trying to bond with their franchisees and who are trying to help franchisees to attract and retain employees," says David Hessekiel, president of Cause Marketing Forum Inc.

Monday, May 07, 2007

According to an Associated Press report, people who were hit hardest by refund anticipation loans were low income households. A North Carolina investigation found that people in the state spend about $44 million per year on refund anticipation loans with interest rates topping 800%. The study claims that nearly 86% of the refund loans issued in 2004 went to low-income borrowers. About 500,000 taxpayers in North Carolina get tax refund loans every year, with average costs ranging from $78.30 to $174.95. For more details on the study visit Forbes.com.

According to CarAndDriver.com, Mark Chernoby, Vice President of DaimlerChrysler, delivered a testimony calling on Congress to broaden tax credits to include all diesel vehicles. He spoke during a hearing in the U.S. Senate Finance's subcommittee on Energy, Natural Resources and Infrastructure where congress is looking into use tax incentives to speed introduction of more fuel-efficient vehicles. "The credit has been pivotal in establishing consumer acceptance of hybrid passenger cars and we believe it will be helpful in the future in encouraging more hybrid light trucks," Chernoby claimed. "Introduction of diesel passenger vehicles and light trucks would establish an altogether new market for biodiesel and renewable diesel."

Friday, May 04, 2007

The Internal Revenue Service has brought charges up against a Washington man who was operating a "warehouse bank" from his own home. According to court documents he had taken in over twenty eight million dollars from people across the country looking for a "discreet" bank account. According to an IRS investigator, Robert Arant had hundreds of customers who used his banking services to conceal assets for the purpose of evading taxes. A civil complaint was brought up against Arant for promoting abusive tax shelters and unlawfully interfering with Internal Revenue Service laws. For more information visit WTOPnews.com.